Woolworths insurance ad 'misleading': ASIC

Woolworths has been forced to retract a claim it made in an ad for car insurance after the corporate watchdog deemed it misleading.

It comes as the big supermarkets encroach further into the financial services industry, with Wesfarmers also competing for insurance through Coles.

The Australian Securities and Investments Commission said the ad campaign, which appeared online and outdoors late last year and early this year, used misleading claims about how much the insurance would cost.

It said the supermarket's claim that customers saved 'on average' $240 was based on an unfair comparison between two Woolworths products.

"When comparing products in an ad, the products should have sufficiently similar features to make the comparison relevant and not misleading," ASIC Deputy Chairman Peter Kell said.

Woolworths offers a range of insurance products, including life insurance, home insurance, travel insurance and even pet insurance.

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While the car insurance ad featured a disclaimer, ASIC said it was not prominent enough.

"The more that a qualification is required to balance the information contained in the headline claim, the clearer and more prominently placed the qualification should be," Mr Kell said.

The Commonwealth Bank and HSBC Australia have also been forced to change their ads for financial products after ASIC claimed they were potentially misleading.

The regulator said the ads created the impression the financial products were simply and low risk, when in fact they were complex investments.